Will stopping immigration cause labor shortages?

Whether stopping immigration will cause labor shortages is one of the most heavily debated questions in economics and public policy. Economists, policymakers, and business leaders hold differing views on the matter, and the answer often depends on the industry, the time horizon (short-term vs. long-term), and how one defines a "labor shortage."

The Argument That Stopping Immigration Will Cause Labor Shortages

Proponents of this view argue that modern economies—particularly in developed nations like the United States, Canada, and parts of Europe—have become structurally dependent on foreign-born labor.

•Demographic Realities: Many developed nations are experiencing aging populations and birth rates well below the replacement level. Without immigration, the overall working-age population is projected to shrink. Proponents argue that immigrants are essential to offset this decline and sustain the workforce.

•Sector-Specific Reliance: Certain critical industries rely heavily on immigrant labor. For example, in the United States, immigrants make up a disproportionate share of workers in agriculture (representing up to 70% of farmworkers), construction, hospitality, food processing, and eldercare. Removing or stopping this labor pool leaves immediate vacancies that are difficult to fill.

•The "Complementary" Labor Theory: Many economists argue that immigrant and native-born workers are "complements" rather than direct substitutes. For instance, having immigrant workers to perform manual labor (like agricultural harvesting or roofing) allows businesses to expand and hire native-born workers for supervisory, logistics, or administrative roles. If the manual labor disappears, the entire business may contract, leading to job losses for native-born workers rather than opportunities.

•Real-World Evidence of Shocks: Business groups often point to periods of restricted migration—such as during the COVID-19 pandemic or periods of heightened enforcement—as proof of labor shortages. During these times, industries like agriculture, dining, and construction reported unharvested crops, reduced operating hours, and delayed projects.

The Argument That Stopping Immigration Will Not Cause Labor Shortages

Critics of high immigration levels, along with some labor economists, argue that "labor shortages" are often a misnomer and that restricting immigration can lead to healthier economic adjustments.

•The "Wage Shortage" Argument: From a market perspective, a shortage of labor only exists at a specific price. Restrictionists argue that if employers cannot find workers, it is because they are not offering high enough wages, sufficient benefits, or acceptable working conditions. If immigration is stopped, the supply of labor contracts, forcing businesses to compete for native-born workers by raising wages.

•Incentive for Automation and Innovation: A continuous supply of low-cost foreign labor can act as a disincentive for businesses to modernize. When labor becomes scarce and expensive, companies are forced to invest in capital, technology, and automation. Historically, when guest worker programs have ended, many industries (such as agriculture) eventually adapted by mechanizing tasks, which increased overall worker productivity.

•Bringing Marginalized Workers Back into the Force: Some economists argue that cheap labor allows companies to overlook domestic populations that have dropped out of the labor force, such as younger workers, veterans, or individuals with lower levels of formal education. Restricting immigration pressure employers to recruit, train, and retain these native-born workers.

•Reduced Strain on Infrastructure: A smaller population growth rate can reduce demand on housing, public services, and infrastructure, which some argue offsets the localized economic friction of a tighter job market.

Short-Term Disruption vs. Long-Term Adaptation

Most economists agree that the impact of stopping immigration is highly dependent on the timeframe:

1.In the Short Term: Stopping immigration almost certainly causes immediate, localized labor shortages and supply-chain disruptions in labor-intensive industries. Businesses cannot instantly automate their operations or find native-born replacements, which can lead to higher prices (inflation) for goods like food and housing, and reduced business output.

2.In the Long Term: The economy will eventually adapt, but the nature of that adaptation is debated. Some believe the economy will settle into a new equilibrium with higher wages, greater automation, and increased productivity. Others argue the long-term result will simply be a smaller, less dynamic economy with lower overall GDP growth, reduced consumer spending, and fewer domestic jobs due to a lack of scale and entrepreneurship.

Citations (12)

1forumtogether.orgNonprofits and think tanks
forumtogether.org
Backs: “Demographic Realities: Many developed nations are experiencing aging populations and birth rates well below the replacement level. Without immigration, the overall working-age population is projected to shrink.”
2cmsny.orgNonprofits and think tanks
cmsny.org
Backs: “Demographic Realities: Many developed nations are experiencing aging populations and birth rates well below the replacement level. Without immigration, the overall working-age population is projected to shrink.”
3americanprogress.orgNonprofits and think tanks
americanprogress.org
Backs: “Without immigration, the overall working-age population is projected to shrink. Proponents argue that immigrants are essential to offset this decline and sustain the workforce.”
4theguardian.comNews and mediaquality 0.75
theguardian.com
Backs: “For example, in the United States, immigrants make up a disproportionate share of workers in agriculture (representing up to 70% of farmworkers), construction, hospitality, food processing, and eldercare. Removing or stopping this labor pool leaves immediate vacancies that are difficult to fill.”
5econlib.orgEncyclopedias and reference
econlib.org
Backs: “Removing or stopping this labor pool leaves immediate vacancies that are difficult to fill. The "Complementary" Labor Theory: Many economists argue that immigrant and native-born workers are "complements" rather than direct substitutes.”
6stanford.eduAcademic
stanford.edu
Backs: “The "Complementary" Labor Theory: Many economists argue that immigrant and native-born workers are "complements" rather than direct substitutes. For instance, having immigrant workers to perform manual labor (like agricultural harvesting or roofing) allows businesses to expand and hire native-born workers for…”
7forbes.comNews and mediaquality 0.83
forbes.com
Backs: “If the manual labor disappears, the entire business may contract, leading to job losses for native-born workers rather than opportunities. Real-World Evidence of Shocks: Business groups often point to periods of restricted migration—such as during the COVID-19 pandemic or periods of heightened enforcement—as proof of…”
8econofact.orgAcademic
econofact.org
Backs: “Real-World Evidence of Shocks: Business groups often point to periods of restricted migration—such as during the COVID-19 pandemic or periods of heightened enforcement—as proof of labor shortages. During these times, industries like agriculture, dining, and construction reported unharvested crops, reduced operating…”
9reddit.comForums and Q&A
reddit.com
Backs: “The "Wage Shortage" Argument: From a market perspective, a shortage of labor only exists at a specific price. Restrictionists argue that if employers cannot find workers, it is because they are not offering high enough wages, sufficient benefits, or acceptable working conditions.”
10cis.orgNonprofits and think tanks
cis.org
Backs: “Restrictionists argue that if employers cannot find workers, it is because they are not offering high enough wages, sufficient benefits, or acceptable working conditions. If immigration is stopped, the supply of labor contracts, forcing businesses to compete for native-born workers by raising wages.”
11equitablegrowth.orgNonprofits and think tanks
equitablegrowth.org
Backs: “When labor becomes scarce and expensive, companies are forced to invest in capital, technology, and automation. Historically, when guest worker programs have ended, many industries (such as agriculture) eventually adapted by mechanizing tasks, which increased overall worker productivity.”
12americanimmigrationcouncil.orgNonprofits and think tanks
americanimmigrationcouncil.org
Backs: “Bringing Marginalized Workers Back into the Force: Some economists argue that cheap labor allows companies to overlook domestic populations that have dropped out of the labor force, such as younger workers, veterans, or individuals with lower levels of formal education. Restricting immigration pressure employers to…”